The Indian government has scaled back its gold monetisation scheme by discontinuing the medium-term (5–7 years) and long-term (12–15 years) deposit options while retaining the short-term (1–3 years) facility.
The finance ministry said the decision reflects evolving market conditions and the scheme’s performance. By removing medium- and long-term government-backed deposits, authorities aim to reduce future fiscal obligations tied to interest payouts as the value of gold rises.
Under the previous arrangement, banks paid interest on short-term deposits while the government guaranteed interest for medium- and long-term deposits. Those existing medium- and long-term deposits will be honoured until maturity, and the Reserve Bank of India has updated its master directions to reflect the change.
Gold has climbed more than 15% this year as investors have sought safe-haven assets amid geopolitical tensions and economic uncertainty. The alteration to the monetisation scheme could affect savers and jewelers who used the program to earn returns on idle gold holdings, and may shift depositors toward the remaining short-term option or into private market alternatives.
Policy observers note the move trims the government’s contingent liabilities related to interest payments while preserving a limited short-duration option that still allows households and institutions to monetize gold temporarily. The updated framework is expected to be implemented through notifications from the finance ministry and regulatory guidelines from the Reserve Bank of India.